Tell me how you are doing and I will tell you where you are shopping.

The morale of French people…

Barometer [1] of the degree of the optimism toward the general state of economy and the own financial situation of the French people is regularly brought to attention for its effects on sectoral or national demand. Indeed, the morale is likely to determine the “willingness to buy” or, on contrary, the desire to make savings to cope with a degraded material situation. And what if beyond these macro effects, it can also explain the turnover variations of different formats of stores (discount stores, supermarkets or hypermarkets)? This is the question raised by Paul-Valentin Ngobo and Aurore Ingarao in a recent article in Recherches et Applications en Marketing.

Everything is fine! Credits: Catoune

Well-founded curiosity …

Two following questions reveal the core of the work done by the authors:

Do variations in households’ morale explain the changes in expenditures depending on the store format? If so, to the benefit of which store formats?
Does this influence depend on the already reached level of the index?

The idea behind the research is that the change in households’ morale should have an impact on inter-format competition as consumers are inclined to make a choice specifically based on their price sensitivity.

… accompanied with a rigorous methodology of investigation …

The authors analyzed the panel data of MarketingScan company from 2004 to 2009. This data provides information on the purchasing behavior of Angers Valley households in 14 stores: 2 discount stores, 6 supermarkets and 6 hypermarkets. Additional data was provided by a French national brand. In total, no less than 351 955 observations of 3016 households’ purchases were examined during the mentioned period.

… leads to sometimes unexpected results …

Research shows that before the economic crisis, the variation in households’ morale does not affect the level of expenditures per visit in the discount store. On the other hand, households spend more in supermarkets every time the morale gets better and especially when it reaches the highest level. This increase is accompanied by a greater consumption of national brands (particularity, promoted brands) to the detriment of the private labels.

Conversely, when the morale degrades, households’ expenditures in the supermarket also decrease as a result of a reduction in the national brands consumption in favor of private labels. A similar phenomenon is observed in the case of hypermarket. However, it should be noted that the effect of decrease of morale level is greater in the hypermarket than in the supermarket. The phenomenon can be probably explained by the fact that hypermarkets have a larger assortment of private labels than supermarkets.

… and fertile managerial implications.

Ultimately, this research proving that consumers morale influences their preference for a store format has direct and obvious implication to encourage brand managers to use the INSEE index in order to develop marketing that the authors call “proactive”, leading to the identification of the most opportune moments to engage in certain marketing actions.

And for you, what is your favorite store format at the moment?

[1] Indicator created by INSEE, https://www.insee.fr/fr/statistiques/2838776